Overseas Purchasing - GST Threshold about to be reduced

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#1357389 3-Aug-2015 00:07

*sigh* I purchase things overseas not to avoid paying GST but because either the product isn't available in New Zealand or when it is available the retailer charges two times the going rate hence I purchase from overseas. Also, retailers need to realise something - if they're going to charge a premium then the premium must be because there is a convenience factor associated with buying from them - if they say to me, "oh, we need to order it in and it'll take 3 days" then I might as well purchase it online instead; it is up to you to make sure that your store is always stocked with product so when I walk off the street I can walk out the same day with the product in my hand.

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#1357405 3-Aug-2015 04:49

Lets do a few quick calculations on the back of this napkin..

My last 30 purchases, 28 came from overseas. In almost all cases the local equivalent was at least double the price. Add on $20 GST and ... yep, still ordering online from overseas. Its not even close most of the time. A whisker of GST won't even make it into my decision making, its a rounding error.

I have a friend who owns a small store in Newmarket, been in business 30+ years - he tells me his lease has increased $80K in the past decade. Local doesn't stand a chance while hog tied to property prices.

If the government really wants to help local business compete, lower the overheads. Which ultimately means the price of property. That is of course if you want to actually attempt to resolve the problem.

Or we can all sit around dabbing at the problem with cotton buds and doing bugger all.

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#1357408 3-Aug-2015 07:02

shk292:
mattwnz:
shk292:
mattwnz:
sbiddle:
sir1963:

As a guess, I would say the GST thing is another offshoot of the TPPA, the large corporations trying to protect their "Zoning" where they can have higher markups in certain areas. How soon will it be before we get told we can't import anything because it breaches some corporations copyright ?
It's been discussed in depth that parallel importing will very likely become illegal again as a result of TPP. What most people don't actually realise is that NZ is pretty unique in having parallel import rules - it's something that's banned in across the vast majority of the world.

Luckily the TPP agreement has failed at the moment. I fail to see much advantage to NZ in signing up. Not only will likely stop parallel importing, which will raise local pricing due to lack of competition with the lower pricing. But it will also mean NZ taxpayers will be paying more for drugs, and could mean some drugs may not be funded due to cost, as the drug buying agency won't be able to buy cheaper generic drugs. It is lose lose IMO for your average kiwi.

Considering the TPP is being negotiated in confidence and is still under negotiation, there seem to be an awful lot of people around who know what's going to happen when it is finalized. We're going to get locked up in jail for breaking our iphones, pay more for drugs (despite the flat charge for prescriptions), not be able to parallel import, pay more for other stuff etc etc

It will be interesting to see what it is really like...

The government has already said that the government (which is tax payer funded ) will have to pay more to buy in drugs, as per the PM on this article http://www.stuff.co.nz/national/politics/70605894/john-key-says-nzs-drug-bill-set-to-rise-under-tpp-but-patients-protected

You do realise that the flat fee for prescriptions is just a token payment to cover the dispensing costs at the phamacy, and isn't the actual cost to the taxpayer to buy the drugs. Sure, someone getting the drugs at the store may initially appear to not be paying more when they pick up the drugs, but they will be paying more in their overall taxes. The government has already said that they will cover the extra costs in trhe drugs, and who funds the government...the taxpayer, which is the person who is paying the price rise. The problem is that the drug buying agency has a budget, so if some drugs go up in price, and they can't buy cheaper generics, then either they have to ask for more money from taxpayers, or not fund them.

Yes, all true. Which is one reason the govt will only go into the deal if the benefits outweigh the costs.

Generic drugs are usually around 5-10x cheaper than branded.

Eg paracetamol 500mg. Generic around 4c each. Panadol around $5 for 20.

I think.

sir1963

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#1357412 3-Aug-2015 07:26

joker97:
shk292:
mattwnz:
shk292:
mattwnz:
sbiddle:
sir1963:

As a guess, I would say the GST thing is another offshoot of the TPPA, the large corporations trying to protect their "Zoning" where they can have higher markups in certain areas. How soon will it be before we get told we can't import anything because it breaches some corporations copyright ?
It's been discussed in depth that parallel importing will very likely become illegal again as a result of TPP. What most people don't actually realise is that NZ is pretty unique in having parallel import rules - it's something that's banned in across the vast majority of the world.

Luckily the TPP agreement has failed at the moment. I fail to see much advantage to NZ in signing up. Not only will likely stop parallel importing, which will raise local pricing due to lack of competition with the lower pricing. But it will also mean NZ taxpayers will be paying more for drugs, and could mean some drugs may not be funded due to cost, as the drug buying agency won't be able to buy cheaper generic drugs. It is lose lose IMO for your average kiwi.

Considering the TPP is being negotiated in confidence and is still under negotiation, there seem to be an awful lot of people around who know what's going to happen when it is finalized. We're going to get locked up in jail for breaking our iphones, pay more for drugs (despite the flat charge for prescriptions), not be able to parallel import, pay more for other stuff etc etc

It will be interesting to see what it is really like...

The government has already said that the government (which is tax payer funded ) will have to pay more to buy in drugs, as per the PM on this article http://www.stuff.co.nz/national/politics/70605894/john-key-says-nzs-drug-bill-set-to-rise-under-tpp-but-patients-protected

You do realise that the flat fee for prescriptions is just a token payment to cover the dispensing costs at the phamacy, and isn't the actual cost to the taxpayer to buy the drugs. Sure, someone getting the drugs at the store may initially appear to not be paying more when they pick up the drugs, but they will be paying more in their overall taxes. The government has already said that they will cover the extra costs in trhe drugs, and who funds the government...the taxpayer, which is the person who is paying the price rise. The problem is that the drug buying agency has a budget, so if some drugs go up in price, and they can't buy cheaper generics, then either they have to ask for more money from taxpayers, or not fund them.

Yes, all true. Which is one reason the govt will only go into the deal if the benefits outweigh the costs.

Generic drugs are usually around 5-10x cheaper than branded.

Eg paracetamol 500mg. Generic around 4c each. Panadol around $5 for 20.

I think.

Yep.
https://twitter.com/BarristerNZ/status/627074056169263104

NOW, last time I heard I think that Pharmaceutical cost to NZ was about $2Billion a year, that could rise to $10Billion if the costs rise by a factor of 4
I am wondering where the extra Billions will come from.

I am at a loss also why large corporations could write many of the proposals, yet we the citizens are not allowed to see it for 5 years after it is signed.
Hell the opposition parties in government are not allowed to see either.

THAT is dangerous.

Fred99

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#1357494 3-Aug-2015 08:45

sir1963:
joker97:
shk292:
mattwnz:
shk292:
mattwnz:
sbiddle:
sir1963:

As a guess, I would say the GST thing is another offshoot of the TPPA, the large corporations trying to protect their "Zoning" where they can have higher markups in certain areas. How soon will it be before we get told we can't import anything because it breaches some corporations copyright ?
It's been discussed in depth that parallel importing will very likely become illegal again as a result of TPP. What most people don't actually realise is that NZ is pretty unique in having parallel import rules - it's something that's banned in across the vast majority of the world.

Luckily the TPP agreement has failed at the moment. I fail to see much advantage to NZ in signing up. Not only will likely stop parallel importing, which will raise local pricing due to lack of competition with the lower pricing. But it will also mean NZ taxpayers will be paying more for drugs, and could mean some drugs may not be funded due to cost, as the drug buying agency won't be able to buy cheaper generic drugs. It is lose lose IMO for your average kiwi.

Considering the TPP is being negotiated in confidence and is still under negotiation, there seem to be an awful lot of people around who know what's going to happen when it is finalized. We're going to get locked up in jail for breaking our iphones, pay more for drugs (despite the flat charge for prescriptions), not be able to parallel import, pay more for other stuff etc etc

It will be interesting to see what it is really like...

The government has already said that the government (which is tax payer funded ) will have to pay more to buy in drugs, as per the PM on this article http://www.stuff.co.nz/national/politics/70605894/john-key-says-nzs-drug-bill-set-to-rise-under-tpp-but-patients-protected

You do realise that the flat fee for prescriptions is just a token payment to cover the dispensing costs at the phamacy, and isn't the actual cost to the taxpayer to buy the drugs. Sure, someone getting the drugs at the store may initially appear to not be paying more when they pick up the drugs, but they will be paying more in their overall taxes. The government has already said that they will cover the extra costs in trhe drugs, and who funds the government...the taxpayer, which is the person who is paying the price rise. The problem is that the drug buying agency has a budget, so if some drugs go up in price, and they can't buy cheaper generics, then either they have to ask for more money from taxpayers, or not fund them.

Yes, all true. Which is one reason the govt will only go into the deal if the benefits outweigh the costs.

Generic drugs are usually around 5-10x cheaper than branded.

Eg paracetamol 500mg. Generic around 4c each. Panadol around $5 for 20.

I think.

Yep.
https://twitter.com/BarristerNZ/status/627074056169263104

NOW, last time I heard I think that Pharmaceutical cost to NZ was about $2Billion a year, that could rise to $10Billion if the costs rise by a factor of 4
I am wondering where the extra Billions will come from.

I am at a loss also why large corporations could write many of the proposals, yet we the citizens are not allowed to see it for 5 years after it is signed.
Hell the opposition parties in government are not allowed to see either.

THAT is dangerous.

Paracetamol is long off-patent - the TPP wouldn't affect availability or price of branded or generic common drugs like that. Some drugs are even cheaper than the subsidised prescription charge - cheaper to buy over the counter if not restricted than at the set price.

The TPP would have affected the price of new patent medicines. Radio NZ interviewed an oncologist a few days ago, he was confirming what the politicians were denying - that the human cost would be high. There are already new generation drugs not available through Pharmac because of very high prices which extend life, improve quality of life, and potentially put some cancers in remission. TPP would extend the period of patent. The politicians incl Key were talking about increasing Pharmac budget to counter increased cost, but that misses this whole aspect of drugs which are too expensive for Pharmac funding anyway, and under the TPP would remain too expensive for years longer than they are now.
Ask yourself how you'd feel if suffering from metasticised melanoma, if a novel treatment was available which may extend your expected lifespan and quality of life for years, but cost $200k per year for the drug. This is a perfectly feasible/probable situation for a few hundred people each year in NZ - and Pharmac will not spend perhaps 25% of it's annual budget for a novel treatment for a couple of hundred people. Once it comes off-patent, then it would likely be funded, as cost would drop to a tiny fraction of the patent medicine price, chances are it's cheap to produce, but over those extra years of patent duration thanks to a TPP, many people will suffer. In the meantime, newer and even more effective drugs would probably become available at huge cost - but availability in NZ would be pushed out due to patent duration.

The politicians may not be lying - but Key, Groser etc are not telling the whole truth, and it beggars belief that they might claim that they weren't aware of what will happen. It's morally reprehensible to talk about "on balance net economic benefit" when you're effectively trading lives for cash - if that discussion needs to be had, then it needs to be debated in public with full information available from experts, not spin-merchants.

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#1357509 3-Aug-2015 08:59

that brings a whole new level of discussion. say $200k per year per person, and say we are spending this sort of money for 200 patients a year, easy. would the public rather spend $40 mil on 200 people, or build half a hospital every year?

this is a rhetorical question. this is the reality faced by every government everywhere in the world.

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Fred99

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#1357541 3-Aug-2015 09:33

joker97: that brings a whole new level of discussion. say $200k per year per person, and say we are spending this sort of money for 200 patients a year, easy. would the public rather spend $40 mil on 200 people, or build half a hospital every year?

this is a rhetorical question. this is the reality faced by every government everywhere in the world.

Rationing of healthcare funding/ apportionment should be an open discussion - not obfuscated, spun, used as a political tool.

There's a massive global problem with the "for profit" healthcare model - it's seriously broken. Incentivising R&D the way we do has serious flaws not only in overall cost, but in distorting the mix of new products delivered by the industry - there's no point putting massive R&D into developing treatments for diseases suffered by people who can't pay. If you were cynical, then you could also claim that there's no point developing a cure for a chronic disease when you're making an ongoing fortune from selling treatments. There's no point investing megabucks in R&D on a novel antibiotic to counter multi-resistant bacteria, when if you succeed, that drug might be put "in reserve" as a last resort treatment until after the patent has expired - I threw that in because that's one example of how extended patents might do some good, but IMO it's still not the right way to go about things.

The US model has people popping more pills per capita than anywhere else in the world, healthcare cost per capita double that of other western countries, yet measurably far worse overall outcome, especially in equality of access. The last thing we should be doing is looking to the US for how a healthcare system should work, including how pharmaceutical R&D is funded.

sleemanj

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#1357620 3-Aug-2015 10:38

michael001: Lets do a few quick calculations on the back of this napkin..

My last 30 purchases, 28 came from overseas. In almost all cases the local equivalent was at least double the price. Add on $20 GST and

... and the additional $49.24 IETF, your $20 extra just became $70 extra.

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#1357640 3-Aug-2015 11:12

If paying gst on everything it would also save on freight as I wouldn't be consolidating into as many < $400 parcels. So one BS security fee on a larger parcel vs many smaller charge free parcels.

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#1357643 3-Aug-2015 11:14

I haven't read the whole thread yet, but will add the following - even with the IETF and 15% GST it is still cheaper to buy some stuff on Amazon than in central Wellington...

Seriously, some of the clothes we buy are 100% more in town than online. When you talk about a wool jacket that is charged NZ$600 on the street, I will pay a bit more than half of that every time.

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#1357696 3-Aug-2015 12:04

freitasm: I haven't read the whole thread yet, but will add the following - even with the IETF and 15% GST it is still cheaper to buy some stuff on Amazon than in central Wellington...

Seriously, some of the clothes we buy are 100% more in town than online. When you talk about a wool jacket that is charged NZ$600 on the street, I will pay a bit more than half of that every time.

Yes. Clothes and shoes have additional duty ON TOP OF GST.

It is 10%.

I have a letter from the Minister "explaining" why that is...see it here

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#1357697 3-Aug-2015 12:07

Further to my own post above, I note that a 10% duty and 15% GST STILL do not explain why a pair of running shoes which cost NZ$120 equivalent in the USA retail at NZ$265....

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#1357703 3-Aug-2015 12:20

Geektastic: Further to my own post above, I note that a 10% duty and 15% GST STILL do not explain why a pair of running shoes which cost NZ$120 equivalent in the USA retail at NZ$265....

because economics.

A supplier will charge what the market is willing to pay as long as they are making money.

In happy clappy land everything would be sold at cost and everything would cost the same everywhere.

In reality, the majority of people buy shoes in a shop - that shop will charge as much as they can while still making sales.

In NZ you have fun things like small population and limited competition.

In America you have bazillions of people and lots and lots of shops selling the SAME goods, so you compete on price.

If you want a pair of high end Nike's here how many shops sell them? 5? How many of those are part of the same parent company?

Does shops charging more suck? Yes. Is it surprising - not at all.

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#1357727 3-Aug-2015 12:40

wasabi2k:
Geektastic: Further to my own post above, I note that a 10% duty and 15% GST STILL do not explain why a pair of running shoes which cost NZ$120 equivalent in the USA retail at NZ$265....

because economics.

A supplier will charge what the market is willing to pay as long as they are making money.

In happy clappy land everything would be sold at cost and everything would cost the same everywhere.

In reality, the majority of people buy shoes in a shop - that shop will charge as much as they can while still making sales.

In NZ you have fun things like small population and limited competition.

In America you have bazillions of people and lots and lots of shops selling the SAME goods, so you compete on price.

If you want a pair of high end Nike's here how many shops sell them? 5? How many of those are part of the same parent company?

Does shops charging more suck? Yes. Is it surprising - not at all.

So in essence, it is because Kiwi shop owners feel entitled to rip off their customers?

wasabi2k

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#1357730 3-Aug-2015 12:47

Geektastic:
wasabi2k:
Geektastic: Further to my own post above, I note that a 10% duty and 15% GST STILL do not explain why a pair of running shoes which cost NZ$120 equivalent in the USA retail at NZ$265....

because economics.

A supplier will charge what the market is willing to pay as long as they are making money.

In happy clappy land everything would be sold at cost and everything would cost the same everywhere.

In reality, the majority of people buy shoes in a shop - that shop will charge as much as they can while still making sales.

In NZ you have fun things like small population and limited competition.

In America you have bazillions of people and lots and lots of shops selling the SAME goods, so you compete on price.

If you want a pair of high end Nike's here how many shops sell them? 5? How many of those are part of the same parent company?

Does shops charging more suck? Yes. Is it surprising - not at all.

So in essence, it is because Kiwi shop owners feel entitled to rip off their customers?

The purpose of a shop is to MAKE MONEY. If people are willing to pay it, people will price their products at that level.

No-one is forcing you at gun point to go into a shop and buy something at a price you don't agree with. But clearly other people are going into those shops and buying those products.

I want lots of stuff too, but it costs too much, so I don't buy it.

If you ran a store would you sell everything as low as possible or would you try and make as much profit as possible?

edit: this isn't a kiwi thing - it happens at every level of distribution across almost every non-commodity product in pretty much every industry in every market where there are not price controls.

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